Impact of product structure on order review/evaluation procedures

Abstract

PurposeTo investigate the impact of number of components (NC) and component commonality (CC) (i.e. product structure characteristics) on the effectiveness of component reservation methods and partial order releases (i.e. order review and evaluation (ORE) procedures).Design/methodology/approachSimulation experiments were conducted using a multistage production‐inventory system with MRP for planning. The results were analyzed using analysis of variance.FindingsThe results indicate that: in the presence of component availability problems, partial order release is a more effective ORE procedure than component reservation; product structure characteristics should be considered when selecting partial order release proportions; and high levels of shop congestion (SC) mitigate the influence of ORE procedures, regardless of product structure characteristics.Research limitations/implicationsThis study used fixed lot sizes and two factors to characterize product structures (NC and CC). Thus, studies that investigate the impact of alternative lot sizing strategies and a wider range of product structure factors could provide additional insight into the order release process.Practical implicationsThe results provide a useful source of information for managers to consider when addressing problem orders related to material availability.Originality/valueAlthough the literature on order review/release (ORR) recognizes the possibility of material availability problems, very little guidance is provided on how managers should react to the situation. This paper fulfils an identified information need by integrating and extending the research streams on product structure and ORE activities.